10/21/11 Paris, France – In 2005, few people on the planet could afford Americans’ standard of living. Not even Americans.
But now the wheel has turned. The US is facing financial reality. And yesterday, we gave you our most audacious forecast ever: the popolo minuto are headed for the barricades. Yes, dear reader, prepare for revolution, repression, and ruin. Buy stocks in companies that make police batons and pepper gas…prisons and window glass…drones and bandages.
The Christian Science Monitor:
A Long, Steep Drop for Americans’ Standard of Living
Think life is not as good as it used to be, at least in terms of your wallet? You’d be right about that. The standard of living for Americans has fallen longer and more steeply over the past three years than at any time since the US government began recording it five decades ago.
Bottom line: The average individual now has $1,315 less in disposable income than he or she did three years ago at the onset of the Great Recession — even though the recession ended, technically speaking, in mid-2009. That means less money to spend at the spa or the movies, less for vacations, new carpeting for the house, or dinner at a restaurant.
In short, it means a less vibrant economy, with more Americans spending primarily on necessities. The diminished standard of living, moreover, is squeezing the middle class, whose restlessness and discontent are evident in grass-roots movements such as the tea party and “Occupy Wall Street” and who may take out their frustrations on incumbent politicians in next year’s election.
Per capita disposal personal income — a key indicator of the standard of living — peaked in the spring of 2008, at $33,794 (measured as after-tax income). As of the second quarter of 2011, it was $32,479 — almost a 4 percent drop. If per capita disposable income had continued to grow at its normal pace, it would have been more than $34,000 a year by now.
The misery index — which combines inflation and unemployment — is almost back to where it was 30 years ago — after inflation had reached 13% and stocks had been going down for 16 years.
But wait. Things didn’t turn out so bad after that, did they? In the early ’80s came “Morning in America” and a 20-year boom.
Don’t count on it this time, dear reader. 1981 was everything 2011 is not. Back then, interest rates and inflation were sky high. Stocks were low. And Paul Volcker had just taken over at the Fed. When he said he was going to turn things around, he meant it.
Today, interest rates are at a half-century low…stocks are still expensive…and Ben Bernanke is as confused as Volcker was clear-headed. Turn things around now and you get rising interest rates, falling stock prices…and more misery. Look out the window. You can see the sun on the horizon twice a day. But only once is it rising.
The world has turned. Against us. Mitt Romney may have God in his pocket. But from our perch here at The Daily Reckoning headquarters in Paris, it looks more likely that the gods have gone over to the other side.
Here’s more…from Atlantic Monthly. There are six million more ‘workers’ in the US than there were 10 years ago. Well, they would be workers…if they could get jobs. Trouble is, there are fewer jobs today than there were then. In other works, over the decade, the US economy backed up. Here’s more:
50% of All Workers Made Less than $26,000 in 2010
Today we get our first look at American wages in 2010 based on payroll taxes reported to the Social Security Administration. David Cay Johnston picks out the most important takeaways, including:
1) Half of all workers made less than $26,364, the median wage in 2010. That means the typical wage is at its lowest level since 1999, after adjusting for inflation.
2) The number of millionaires increased by about 20 percent.
3) The size of the missing workforce is 10 million. The number of working people fell by 5.2 million since 2007. But that’s not the entire job deficit, because, based on population growth estimates, 4.5 million more would have joined the workforce between 2007 and 2011. Add it up, and you get a 10-million-worker gap.
What you see in the graph above is that median pay took a nosedive after 2007, effectively wiping out all gains made in the previous eight years.
Americans are getting poor faster than they got rich.
Bill Bonner
for The Daily Reckoning
Bill Bonner
Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries. A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America's most respected authorities. Along with Addison Wiggin, his friend and colleague, Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. Both works have been critically acclaimed internationally. With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance. Since 1999, Bill has been a daily contributor and the driving force behind The Daily Reckoning. Dice Have No Memory: Big Bets & Bad Economics from Paris to the Pampas, the newest book from Bill Bonner, is the definitive compendium of Bill’s daily reckonings from more than a decade: 1999-2010.
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Now Bill, if God was on Romney’s side he would be president. Brigham Young is not a God. A murdering theif maybe. Bill likes French history. I like American Indian history. OWS needs to look at thee Sioux and all the rest of us. We fought the Federalist Yankees. We were tough, but compassionate. They are tough and cruel. They have always done a good job waging war on civilians. They have men like Danny Green and we have men like Ron Paul. We are not sone cold killers like them.
If the average person will have a poor standard of living, the rational solution is to strive to be well above average. (Like Bill)
It is this striving which built America.
Fear not. Strive On!
Pity the poor American who must turn on his HDTV to see the bad news every morning on the free airwaves and spend all morning checking for jobs on his iPhone with unlimited high speed data plan. Then he can curl up for a cup of $4 joe at the local Starbucks and think on why he is so very unfortunate. Maybe he’ll pause every once in awhile to use a clean bathroom connected to an expertly designed sewer system before heading over to the downtown Bistro to drop $8 on a panini before resuming looking for work. He might have to settle for clean, purified drinking water rather than a soda pop or another latte.
Sigh…no job offers today. Guess he’ll just have to alleviate his misery with a movie downloaded from NetFlix on a free high-speed WiFi connection before heading home to rant and rail on the Internet about how the government and the rich have destroyed America. He might use words and sentences he garnered from his free, public education to make the rant. He will not understand anything about what I’ve just written and will vehemently disagree with me (once he looks up the meaning of vehemently…online again with his iPhone). You see, he failed economics and didn’t pay attention in history, so he has no sense of the privileges he enjoys daily vs. billions of people living in the squalor of the underdeveloped worlds slums and war-torn nations.
Yes, pity the poor, poor American.
I’d rather be like me.
Shawn, the President and I are still waiting for your Third Way recommendations.
Erik where you get your sense of humor. Its very funny but 100% true.
Most of that stuff was overrated anyway. How many Americans sold their freedom for granite countertops?
Warren and the President: I only go one way and don’t even know about the “third way”. While I like you guys I am not interested in your proposed three I mean third way.
*doesn’t know what Third Way is*
Shawn, you can forget about getting any more free autographed photos.
Good post Eric, nice to keep things in perspective.
Buy stock in police batons and pepper gas?
How about stock in pitch forks and torches!
Shawn, please contact my staff to arrange for a brainstorming session on the Third Way Project.
While Erik was poking fun at some of the unemployed Con gress passed three more ‘Free’ trade scams and Mexican Truckers are now crossing the borders while American Truckers get stopped by TSA, More jobs down the tubes for Americans and those still with jobs or who have hit it big time in the Stock Casino joke about the situation. Maybe a quick stroll down to a local tent city might help.
Feeling sorry for the unemployed seems a bad thing at DR. A Post for the poor goes missing. Good job moderator
Am I the only poor chap glad to see America go up in smoke? All that hubris about invading Eye-rack in 2003, despite the opposition of the world. To paraphase Ms. Palin, how’s that WMD/smoke ‘em out of their caves/hopey/changey thingey goin’ for ya?
A colossal waste of our talent and treasury. But, sure ’nuff, everyone now claims he was against invading Eye-rack from the start. We can’t find anyone now who admits he got all riled up in a jingoistic fervour for no good reason.
You reap what you sow, friends. You sowed the seeds of discontent and war abroad, you now reap the harvest of bankruptcy and falling living standards.
Thankfully, here in Singapore, a man can earn a living with the knowledge that his tax dollars aren’t being spent abroad to murder brown men with funny names who say the word God in a different language.
Erik, all that stuff (basically toys) and no job. Think about it.
Fred-
No job means no development, diminished self worth, and no hope. It is living like your parents are sending you to summer camp, not bad for awhile, but shouldn’t the summer end?
I wonder if Erik has ever been unemployed. After a while I found it difficult to enjoy all the diversions he mentioned. I don’t think you can enjoy true relaxation without true productivity first. But maybe a high score on Angry Birds does it for some people…
Cheers.
You’re both right.
Shawn, it is important that you contact me ASAP regarding the Three Way Project.
Thanks!
Keep talking Alistar. Your perspective is appreciated.
Fred,
Clean drinking water and a sanitary sewer system are not toys. Think about it.
JRod,
Yes, I have been unemployed. I was not relaxed. Neither did I expect anyone else but me to fix my problem or buy me free pizza.
Alistair, I was against invading Eye-rack from the start. I even emailed the President – twice. But he didn’t listen, and I don’t have the money to move to Singapore.
Hint – don’t spray paint any cars.
I was a young bloke down under in the 1970′s and remember feeling humiliation when big brother the USA told us we were 10-20 years behind them.
Have a look at us now!
Average financial wealth 4 times the USA
No fear of guns, the weather of California,etc. Our biggest problem is the deluge of refugees fleeing eye-rack and Afghanistan.
I have always enjoyed the company of yanks but as it applies to your politics, I agree with Alistair.
True the working-class are falling behind but the Ceo’s of the world are doing just fine thank-you. In many fortune 500 firms, the Ceo will earn 100 times as much as that of the average working smuck.
No one argues that the boss should be paid the top dollars. But how much is enough? Does the boss really work that much harder or is that much smarter then the rest of us working stiffs? And unlike Steve Jobs who build his company from the ground up, many of these CEO’s are jonny come latelys who simply suck the wealth from the firm for their own personal gain. How many thriving going concerns have we seen in America get destroyed when some vulture fund has purchase it pocketed the cash of hand and sold off the assets. Greed is not good. Greed is what has destroyed America!
To Erik..Netflix just lost 800,000 subscribers. Starbucks has closed coffee shops all over the country. The restless consumer is broke. The party is over. The good paying manufactoring jobs all shipped over seas. And all that offshore crap…nothing wants it anymore. Time to hunker down folks, the Great Recession has only just begun.
Collapse is IMMINENT…….2012 if not sooner
10/28/2011
Are we all going to have to speak mandarin chinese now?
Hey wonder weinies! Haven’t heard anything about a new money making idea that anyone of you have devised…or talk about any of the basic trades, (electricity, plumbing, building)…all of which in various factions make up our economies…yet, plenty of hollow ideas that are wrent with the Obama Lamb idiologies…give me, give me…I have rights,I deserved everything without effort! Puk..you weinies…are getting what you deserved..the results of spreading the wealth! You are the reasons for our problems..You are going to get what you deserve…no jobs, money, credible respect and a future of hope. Live off the crumbs your fabulous govrnment believes you need..Your beginning to enjoy the socialistic policies. If your really smart..you could start a franchise of the “weinie whinners”, and find out with all of your collective intelligence, what your ideas are worth..Betcha youd make millions and than run for a public office! Go Weiners!!!
When will all the right wing propagandists stop rewriting history? Bonner is correct about much, but he has no memory. He writes:
“Don’t count on it this time, dear reader. 1981 was everything 2011 is not. Back then, interest rates and inflation were sky high. Stocks were low. And Paul Volcker had just taken over at the Fed. When he said he was going to turn things around, he meant it.”
Volcker was appointed Fed Chairman in 1979. I know that it is inconceivable that Carter did anything right. But facts are indeed stubborn (not stupid) things.